Union Pacific reports Q1 2020 financial results
Written by David C. Lester, Editor-in-Chief
David C. Lester
Union Pacific Corporation today reported 2020 first quarter net income of $1.5 billion, or $2.15 per diluted share. This compares to $1.4 billion, or $1.93 per diluted share, in the first quarter 2019.
“Against the backdrop of the emerging COVID-19 pandemic and a challenging volume environment, we leveraged productivity to deliver strong financial results, including an all time best operating ratio of 59 percent,” said Lance Fritz, Union Pacific chairman, president and chief executive officer. “We also made substantial improvement in employee safety, which is a testament to our dedicated employees. Our rail network has never run better, providing a safer, more reliable and efficient service product to our customers.”
First Quarter Summary
Operating revenue of $5.2 billion was down 3 percent in first quarter 2020, compared to first quarter 2019. First quarter business volumes, as measured by total revenue carloads, decreased 7 percent compared to 2019. Industrial volumes increased compared to 2019, while bulk and premium shipments declined. In addition:
- Quarterly freight revenue declined 3 percent, compared to first quarter 2019, as positive business mix and core pricing gains were offset by lower volumes and decreased fuel surcharge revenue.
- Union Pacific’s 59 percent operating ratio represented a quarterly record and the fourth consecutive quarter below 60 percent, improving 4.6 points compared to first quarter 2019.
| Operating Ratio | Earnings Per Diluted Share | |
|---|---|---|
| First Quarter 2019 2019 Payroll Tax Refund 2019 Weather Expense Fuel Impact Core Results | 63.6% (0.8) pts 0.8 pts 0.8 pts 3.8 pts | $1.93 ($0.05) $0.05 $0.04 $0.18 |
| First Quarter 2020 | 59.0% | $2.15 |
- The $1.87 per gallon average quarterly diesel fuel price in first quarter 2020 was 10 percent lower than first quarter 2019.
- Fuel consumption rate, measured in gallons of fuel per thousand gross ton-miles (GTMs), improved 5% compared to first quarter 2019, achieving a first quarter record in 2020.
- Union Pacific’s reportable personal injury rate of 0.80 incidents per 200,000 employee hours decreased 11 percent compared to first quarter 2019.
- Quarterly freight car velocity was 209 daily miles per car, an 8 percent improvement compared to first quarter 2019.
- Quarterly locomotive productivity was 131 GTMs per horsepower day, an 18 percent improvement compared to first quarter 2019.
- Average maximum train length was 8,396 feet, a 15 percent increase compared to first quarter 2019.
- The Company repurchased 14.3 million shares in first quarter 2020 at an aggregate cost of $2.6 billion.
Summary of First Quarter Freight Revenues
- Industrial up 3 percent
- Bulk down 5 percent
- Premium down 6 percent
2020 Outlook
Union Pacific expects second quarter 2020 carload volumes to be down around 25 percent, compared to the second quarter 2019. Although the situation is fluid and highly uncertain, the Company fully expects to maintain sufficient liquidity to sustain an extended period of lower volumes.
“Our first priority is the health and safety of our employees during the COVID-19 pandemic, as they perform the work necessary to move the goods communities need during this national emergency,” Fritz said. “The eighteen month implementation of Unified Plan 2020 has put our company in a position of strength, with a strong balance sheet and ample liquidity, as we face today’s fluid and uncertain situation. We remain focused on providing a highly consistent, reliable and efficient service product for our customers.”
A Union Pacific news release.
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